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Martin Kadzere : Senior Business Reporter

AFRICAN countries that have borrowed from international capital markets may be sliding into a debt trap as a result of rising interest rates, the African Development Bank said. Increasingly, many African countries, taking advantage of the low global interest rates, have rushed to the international capital markets by issuing bonds.Between 2006 and 2014, African nations issued $26 billion in Eurobonds. And in 2015 alone, a total of $12 billion of Eurobonds were issued.

With rising interest rates, African countries now face a challenge of high cost of financing the foreign currency denominated debt.

“An indebted Africa cannot be a rising Africa,” AfDB president Akinwumi Adesina said on Tuesday. To maintain resilience, the AfDB president said “Africa must not get into a debt crisis”.

Dr Adesina said there was need for domestic resource mobilisation to fund critical projects by putting in place measures to ensure macroeconomic stabilisation, fiscal consolidation, broadening of the tax base, and deepening of the domestic capital markets.

He said African states should leverage Sovereign Wealth Funds which stand at $162 billion, domestic tax revenue estimated at $500 billion annually, private equity funds, which stand at $20 billion per year, and pension funds estimated at $334 billion.

But more importantly, they must also end the illicit capital flows estimated at over $60 billion a year.

“Money belonging to the citizens should not be found in personal accounts. These are all significant financing sources that should be effectively channelled for development.”

By doing so, Dr Adesina said this would help drive Africa’s “readiness for industrial development.”

“Just last week we were all in Kigali at the World Economic Forum, hosted by President Paul Kagame, discussing the 4th industrial revolution. Africa must improve its readiness index for the digital revolution.

“We must rapidly build skills, scientific capacity, especially in sciences, technology, mathematics and engineering,” he added.

Under the bank’s Jobs for Africa’s Youth Initiative, the AfDB would support digital literacy, logical thinking and computational skills in secondary and primary schools.

It will also support coding academies that will drive advanced computational skills for employment focusing on youths in universities and polytechnics. And through Boost Africa Initiative, with partners — private equity funds will be established to help boost businesses of young people.

The bank plan to leverage $5 billion to support businesses of young African entrepreneurs with the ultimate goal to create 25 million jobs for the youth, over a 10-year period, in agriculture, ICTs and other sectors.

Dr Adesina said the bank will come up $3 billion exclusively for women entrepreneurs.

“The future of African’s youth does not lie at the bottom of the Mediterranean Sea. It lies in a more prosperous and inclusive Africa – one that promotes creativity and innovation, that expands economic opportunities for the youth. It lies in an Africa that creates jobs for its own people.

“We must be audacious: for Africa must develop, and develop with pride. Through the Jobs for Africa’s Youth Initiative which we will launch at these Annual Meetings, the African Development Bank will help promote the creativity and businesses of more young people across all sectors.”